Stimulus Spending On Construction Is Helping Everyone

According to contractors and government highway officials, everyone in the transportation infrastructure community is benefitting from the money appropriated in the federal stimulus legislation. There have been so many bidders on projects let with stimulus funds recently that prices to government bodies are far less than expected, meaning taxpayers are getting more for their money, and contractors are creating more new jobs as a result. John Horsley, executive director of the American Association of State Highway and Transportation Officials says: "The two winners are the public, which gets more improvements, and a net gain in jobs creation. It's a win across the board."

Kenneth Simpson, chief economist for the Associated General Contractors of America, said the favorable trend extends nationwide. Some examples:

BWI Airport improvements estimated at $50 million produced six bids, and will cost $8 million less than estimated.

Carroll County, Maryland, received 21 bids on a $200,000 drainage project.

A Connecticut project on the Merritt Parkway budgeted at $75 million was awarded for $66.6 million.

Many contractors who would not have bid on smaller public projects in the past are now proposing on those jobs to keep their workforce employed and avoid layoffs.

Tax Loss Carry Back To Be Tweaked

In an effort to make tax relief from the economic stimulus legislation available to more American companies, and further stimulate construction and manufacturing industries, Senate Finance Chairman Max Baucus and Senator Olympia Snowe introduced a bill just before the Easter recess began which will tweak the five year net operating loss carry back provisions of the stimulus package. The original legislation limited the five year carry back to businesses with less than $15 million gross receipts annually. The Baucus/Snowe bill will remove that threshold, and permit businesses of any size which have not received TARP bailouts to use the five year carry back to amend past returns and get immediate cash tax refunds to infuse working capital into the business if there have been business losses in the current downturn.

Conflicting Budget Resolutions Go To Conference

Late Thursday afternoon the House passed its version of the five year budget resolution, and just before midnight Thursday the Senate passed its conflicting version. As far as the construction industry is concerned, the major conflict is the difference in approach to transportation infrastructure funding. The Senate version slashes over $72 billion from the amount budgeted by the House for surface transportation infrastructure construction over the next five years, completely negating all the appropriations passed in the economic stimulus package for transport infrastructure construction. The Senate numbers will result in the stimulus appropriations representing mere acceleration of planned spending into the first year of a five year budget, rather than any additional investment in national highway, bridge, waterway, airport, railway and transit construction.

Both bills passed along strict party line votes, without a single Republican vote in favor of the bills in either house of Congress. They will now go to conference committee for reconciliation of the differences, and House Budget Chairman John Spratt said staffers from the House and Senate will begin talks during the upcoming two week recess to speed things along. Let's hope the conferees understand that failure to restore the $72.1 billion investment in transport infrastructure approved in the House budget is essential to avoid completely gutting the economic stimulus of the construction industry.

Is $7.2 Billion For Broadband Construction Going Begging?

In remarks at a convention of the cable TV industry in Washington D.C. yesterday, House Energy and Commerce Communications Subcommittee Chairman Rick Boucher spoke out against open access requirements which could discourage major cable networks from applying for $7.2 billion in grants for construction of broadband towers and other facilities to make internet access available in presently unserved and underserved areas of our nation. The funds, appropriated in the economic stimulus legislation passed earlier this year, have so far been rejected by major cable operators because of the absence of a clear regulatory definition of what "open access" means in terms of availability of facilities to other networks at wholesale rates. Boucher urged the major industry players to apply for the grant money.

Another bottleneck in the way of funding these tower construction contracts is the dispute among Congressional leaders over where the money should be spent. Boucher and House Energy and Commerce Chairman Henry Waxman want the new facilities to be built in both unserved localities, and underserved localities where some service is available. Republicans Joe Barton and Cliff Sterns, ranking members on Waxman's committee and Boucher's subcommittee, want to restrict all the $7.2 billion to construction in completely unserved localities. Until these two regulatory bottlenecks are resolved, the construction contractors waiting for these projects to be released for bidding will continue to go hungry.

OMB To Require Detailed Stimulus Reporting

In testimony today before the Senate Homeland Security and Governmental Affairs Committee, OMB Deputy Director Rob Nabors said guidelines to be issued tomorrow will require federal agencies charged with distributing $630 billion in contracts and grants appropriated in the American Recovery and Reinvestment Act to report who is getting the money, including contractors and subcontractors. Nabors said Recovery.gov will post information, for example, about contractors receiving $40 billion in highway and transit construction projects. In his remarks, Nabors said "The administration believes this level of reporting strikes the appropriate balance between transparency for Recovery Act spending and the burden that reporting imposes on recipients."

Since it seems Nabors has not read my March 16, 2009 E-mail to the White House reminding the administration that construction contractors are already required to submit lien waivers identifying all subcontractors and material suppliers along with their monthly billings on every project in every state. So, I sent him another copy. If only someone from the construction industry were in Washington working on this.

Nabors did predict that $252 billion of the money will be spent before the end of July, 2010.

Broadband Mapping May Delay Network Construction Contracts

Representative Cliff Stearns of Florida, ranking member of the House Energy and Commerce Communications, Technology and The Internet Subcommittee, and Representative Anna Eshoo of California, raised their voices today against expenditure of the $7.2 billion appropriated for extension of broadband networks into unserved and underdserved areas until after completion of a national broadband inventory map now being prepared by the National Telecommunications and Information Administration of the Commerce Department.

Now that Congress is committed to spending this money, it seems government officials just can't resist throwing up bottlenecks to actually sending checks out the door to contractors who need and want to do the work.

Defense Procurement Changes Reflect Obama's Fixed Price Contracting Preference

The Senate Armed Services Committee today unanimously approved Senate Bill 454, which seeks to put a stop to weapons system cost overruns by imposing severe restrictions on the use of cost plus contracting. While weapons research, development and engineering may be thought to be more complex than construction of government buildings, the unanimous committee action sending S. 454 to the Senate floor reflects the new administration's preference for fixed price contracting over more innovative modern forms of procuring government construction projects. Like the fixed price contracting requirements in the American Recovery and Reinvestment Act, this legislation demonstrates the direction the Obama administration is taking towards all government contracting, and should be an omen for those of us in the construction industry who are involved in bidding on these jobs.